Fury at city council's £800k bill for late accounts - the year it axes accounting staff

Brum racks up extra costs while carrying out largest budget cuts in local government history

Cash-strapped Birmingham City Council has been hit with a bill of more than £800,000 after employing outside help to file accounts the year it axed accounting staff.

The council failed to complete its annual accounts on time in 2010-11, and the taxpayer was hit by a host of additional costs as a result.

The
accounts were delivered four months after the legal deadline, after a formal notice to improve from the district auditor Mark Stocks, and six weeks later than the date agreed with Mr Stocks.

And
the additional costs were racked up by the administration, then headed up by Mike Whitby, just as Birmingham was undergoing the largest budget cuts in local government history – the first of a six-year series of cutbacks which will see the council’s budget shrink by more than £600 million.

Details of the additional costs were revealed in the draft accounts for 2011-12 after they were opened for public inspection. The accounts were held up following criticism that the council’s books did not give an accurate picture of the council’s land and building assets.

The documents reveal the council had to pay an additional audit fee of £300,000 as a result of the failings.

It
then had to call in accountancy firm PwC, which cost a further £140,000, and paid £60,000 to upgrade its computer system for recording the council’s land and buildings. It had been forced to abandon its controversial Voyager system after criticism from the auditor of its reliability.

Mr Stocks had challenged the council’s own valuation of its land and property assets noting “a number of material accounting errors”.

Former Birmingham City Council leader Coun Mike Whitby

All
of this happened in the same year as the documents reveal the council spent £316,000 making experienced accountancy staff redundant.

Mr
Stocks said in his report at the time: “Inadequate working papers were provided in key areas such as debtors, creditors, revenue funding capitalised under statute, grants, property, plant and equipment and PFI.”

Perry Barr MP Khalid Mahmood described the cost as a “disgrace” at a time of shrinking council budgets and cuts in services.

“Whenever mistakes happen in local government nobody seems to take responsibility,” he said.

Council
Labour leader Sir Albert Bore, said: “I can only hope that the work has
now been done to put this right and ensure it does not happen in subsequent years.”

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